Consider an automobile manufacturing plant where the rate at which the plant uses power-lock mechanisms (an automobile
Question:
Consider an automobile manufacturing plant where the rate at which the plant uses power-lock mechanisms (an automobile component) is stochastic and normally distributed, with a mean of 192 per day (8 per hour) and a standard deviation of 17.4 per day. Replenishment orders for power-lock mechanisms incur a lead time of 3 days. If the plant runs out of power locks, it must expedite them from the supplier at a large cost so the plant wants to ensure that the percentage of order cycles during which a stock out occurs is at most 2%. Let the fixed cost for each order K = 85 dollars and let the holding cost h = 1.5 dollars per unit per week. Using the heuristic (r, Q) policies for uncertain demand, calculate r and Q.
Mathematical Applications for the Management Life and Social Sciences
ISBN: 978-1305108042
11th edition
Authors: Ronald J. Harshbarger, James J. Reynolds